IOSR Journal Of Humanities And Social Science (IOSR-JHSS) e-ISSN: 2279-0837, p-ISSN: 2279-0845. Volume 7, Issue 3 (Jan. - Feb. 2013), PP 59-66 www.Iosrjournals.Org www.iosrjournals.org 59 | Page Revenue Base and Social Assets Creation in Local Government Areas in Cross River State – Nigeria: A Virile Tool for Overcoming Exclusion and Strengthening Inclusion for Sustainable Development in The Third World. Akabom -Ita Asuquo, PhD, FCCA. Department of Accounting Faculty of Management Sciences University of Calabar, Calabar Cross River State – Nigeria Abstract: The study focused on revenue base and social assets creation in local government areas in Cross River State as a virile tool for overcoming exclusion and strengthening inclusion for sustainable development in the third world. The purposes were to determine the possible causes of poor performance of local government areas in terms of social assets creation and maintenance; and the level of internally generated revenue of the local government areas and their ability to create desirable social assets to enhance sustainable development. To achieve these purposes, data on components of revenue base and social assets of selected local government areas between 1997 and 2011, were collected and analyzed, with the use of regression analysis. It was discovered that revenue base has a significant positive impact on the creation of social assets. Moreover, internally generated revenue which was shown as a stable revenue source was neglected due to over dependence on statutory allocation from the Federation Account. The study concluded that the inability of the local government councils to create adequate social assets is as a result of poor revenue base and lack of commitment, which are worsening by corrupt practices. Based on the above findings and conclusion, it was recommended amongst others that the identified militating factors be properly tackled in order to ameliorate the dearth of social assets in the local government councils so as to ensure sustainable development. Keywords: Revenue Base, Social assets, grants, grass-root development. I. Introduction In recent times, local governments across the country have come under serious criticism from within and outside their boundaries for poor performance-in terms of social assets provision. In these accusations, there seems to be an implicit link between structural imbalances inherent in the local government system and poor performance. This view is amplified by Robson (1968:9) in the following words: Local government has been subjected to a serious and potentially dangerous strain owing to the fact that it was confronted with tasks far greater than those which it was designed to perform. Only two possible solutions are available: - improve the structure so that it is capable of carrying an increased burden, or - transfer functions elsewhere and avoid conferring on local governments, additional responsibilities which they might otherwise not been able to carry. Robson, like other writers on local government, went ahead to prescribe structural reforms as the panacea for improvement in the performance of local government. The structural reforms emphasized are, however, with respect to the composition and powers of the local government, as well as its inter-relationship with other tiers of government. This hypothesis seems to have influenced the setting up of different committees over the decades, to restructure local government in Nigeria for better performance. The above argument, apparently neglects the important question regarding finances. This is in view of the fact that every human activity involves the incurring of costs and that such costs must be financed by resources. According to Adams (2001:148} “the success or failure and the effectiveness or ineffectiveness of local government depends on the amount of financial resources available …” For the local government to execute the multitude of functions assigned to it successfully, it requires enormous amount of resources at its disposal. This is based on the axiom that local government would not be expected “to give what it does not have.” The above scenario can be visualized from three major dimensions. First, the capacity of local government over the decades, to contribute meaningfully to economic growth by developing the grass root, has been constrained by low internally Generated Revenue (IGR) base (CBN, 2000a, Adams, 2001:148). At present, what constitute the Internally Generated Revenue Base on local government are property taxes. Even these property taxes have not been properly exploited to generate the amount of revenue required for effective social assets provision. Worst still, there are numerous revenue sources, which are not exploited at all. This leaves local government in a position of complete dependence on their share of the federally generated revenue (Federation Account and Valued-Added Tax).